Keir Starmer considers scrapping key benefit cap as Rachel Reeves faces £3bn budget hit
Prime Minister Sir Keir Starmer is considering scrapping the two-child benefit cap as he attempts to appease Labour MPs who oppose his welfare reforms, according to Government officials. The move comes as the Prime Minister seeks to head off a rebellion by backbench MPs over his proposed changes to the welfare system.Starmer has indicated in private conversations that he is keen to find a way to eliminate the cap altogether, The Financial Times reports.Work and Pensions Minister Liz Kendall and Education Secretary Bridget Phillipson are also understood to support scrapping the cap, though officials say other options are being considered. The potential policy shift forms part of a broader strategy to address child poverty while maintaining party unity as Starmer navigates resistance to his rightward shift on welfare, immigration and trans rights.The potential scrapping of the two-child benefit cap could create a £3bn hole in the autumn Budget, presenting a significant fiscal challenge for Chancellor Rachel Reeves.This comes at a time when UK Government borrowing unexpectedly rose in April due to higher public spending, adding pressure on Reeves ahead of next month's spending review.The Chancellor is widely expected to raise taxes in the autumn Budget to strengthen Government finances, though further cuts to welfare spending are seen as another option to address the fiscal gap.Reeves is reportedly reluctant to announce costly policies far in advance of fiscal events, when the Office for Budget Responsibility provides official costings. An ally of the Chancellor noted: "If we did what some people want on the benefit cap, that would add further pressures."The Government's child poverty strategy, which was expected to be published in the spring, has been delayed until autumn due to the potential costs associated with scrapping the benefit cap, according to people briefed on the matter.Meanwhile, Starmer faces significant internal opposition to his welfare reform package, which MPs will vote on next month. The reforms could see approximately 80,000 people lose access to disability benefits, including many who need help with washing or using the toilet. Labour MPs involved in organising opposition claim more than 160 colleagues disagree with the proposals and plan to abstain or vote against them.An ally of Liz Kendall suggested that while Starmer's recent movement on winter fuel payments was welcomed by Labour MPs, bold action on child poverty would be more likely to persuade them to back reforms to sickness and disability benefits."Child poverty is the thing that's relevant in that debate," they said.The political considerations surrounding the potential scrapping of the two-child benefit cap are complex. According to a YouGov poll last year, 60 per cent of the public support the cap, including more than 80 per cent of Conservative and Reform voters.This presents a dilemma for Starmer as he attempts to balance addressing child poverty with maintaining broader electoral appeal.Morgan McSweeney, Starmer's chief of staff, is understood to be cautious about conceding too much ground on welfare to appease Labour MPs.The Resolution Foundation forecasts that about 4.8 million children will be in poverty by 2029-30 with the two-child limit in place, including half of children in large families.A senior minister close to Starmer acknowledged the political imperative, stating simply: "We've got to do something on child poverty."
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Prime Minister Sir Keir Starmer is considering scrapping the two-child benefit cap as he attempts to appease Labour MPs who oppose his welfare reforms, according to Government officials.
The move comes as the Prime Minister seeks to head off a rebellion by backbench MPs over his proposed changes to the welfare system.
Starmer has indicated in private conversations that he is keen to find a way to eliminate the cap altogether, The Financial Times reports.
Work and Pensions Minister Liz Kendall and Education Secretary Bridget Phillipson are also understood to support scrapping the cap, though officials say other options are being considered.
The potential policy shift forms part of a broader strategy to address child poverty while maintaining party unity as Starmer navigates resistance to his rightward shift on welfare, immigration and trans rights.
The potential scrapping of the two-child benefit cap could create a £3bn hole in the autumn Budget, presenting a significant fiscal challenge for Chancellor Rachel Reeves.
This comes at a time when UK Government borrowing unexpectedly rose in April due to higher public spending, adding pressure on Reeves ahead of next month's spending review.
The Chancellor is widely expected to raise taxes in the autumn Budget to strengthen Government finances, though further cuts to welfare spending are seen as another option to address the fiscal gap.
Reeves is reportedly reluctant to announce costly policies far in advance of fiscal events, when the Office for Budget Responsibility provides official costings.
An ally of the Chancellor noted: "If we did what some people want on the benefit cap, that would add further pressures."
The Government's child poverty strategy, which was expected to be published in the spring, has been delayed until autumn due to the potential costs associated with scrapping the benefit cap, according to people briefed on the matter.
Meanwhile, Starmer faces significant internal opposition to his welfare reform package, which MPs will vote on next month. The reforms could see approximately 80,000 people lose access to disability benefits, including many who need help with washing or using the toilet.
Labour MPs involved in organising opposition claim more than 160 colleagues disagree with the proposals and plan to abstain or vote against them.
An ally of Liz Kendall suggested that while Starmer's recent movement on winter fuel payments was welcomed by Labour MPs, bold action on child poverty would be more likely to persuade them to back reforms to sickness and disability benefits.
"Child poverty is the thing that's relevant in that debate," they said.
The political considerations surrounding the potential scrapping of the two-child benefit cap are complex.
According to a YouGov poll last year, 60 per cent of the public support the cap, including more than 80 per cent of Conservative and Reform voters.
This presents a dilemma for Starmer as he attempts to balance addressing child poverty with maintaining broader electoral appeal.
Morgan McSweeney, Starmer's chief of staff, is understood to be cautious about conceding too much ground on welfare to appease Labour MPs.
The Resolution Foundation forecasts that about 4.8 million children will be in poverty by 2029-30 with the two-child limit in place, including half of children in large families.
A senior minister close to Starmer acknowledged the political imperative, stating simply: "We've got to do something on child poverty."
